Could Deepak Nitrite be the chemical stock to watch out for in 2024?

Company profile

Deepak Nitrite Ltd, a leading chemical intermediates and chemicals manufacturer, showcases an impressive stock performance narrative. Operating through two key segments, Advanced Intermediates and Phenolics, the company boasts a diverse product portfolio, including sodium nitrite, sodium nitrate, nitro toluidines, fuel additives, phenol, acetone, and more.

Stock performance and technical analysis

In mid-October 2021, the stock began a retracement phase after reaching a high of Rs 3,020, following the preceding rally that commenced on March 19, 2020, at Rs 310. This consolidation period persisted for over two years, finding robust support at the 50% Fibonacci retracement level along with the 200 DMA.

During a recent trading session, a surge in buying interest propelled the stock above a 52-week high, closing above key short-term daily moving averages (DMA) with a crossover of the 5-13-26 DMA. Notably, a significant breakout trendline emerged, connecting the high point of February 04, 2022 (Rs 2,402), with the peak of September 08, 2023 (Rs 2,372.70). This formation represents a technical continuation price pattern that unfolded over two years.

In the last 2 trading sessions, the stock surged more than 3% with strong increasing volumes. In today’s trading session, the stock experienced an upward movement of more than 3.5%, reaching a day high of Rs 2,487.75, surpassing the mentioned breakout trendline at Rs 2,381, with strong volumes exceeding 1.5 million shares. The 14-day RSI, currently placed in the super bullish zone at 73, instils optimism among investors. This entire trading action confirms the breakout of the continuation price pattern.

2024 outlook

With a potential target set at Rs 3,225, representing a gain of more than 35% from the breakout threshold at Rs 2,380, this scenario presents an enticing opportunity for both swing traders and long-term investors closely monitoring Deepak Nitrite Ltd.’s performance. The company’s trajectory offers a promising outlook, brimming with potential for further upward gains.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.